Court uses context to determine "used in connection with" coverage
Union Standard Ins. Co. v. Hobbs Rental
In this declaratory judgment action, the 10th Circuit reversed the district court’s finding of coverage. The insured, Hobbs, rents oil field drilling equipment. It hired Brunson to move a piece of equipment from the oil field to the rental yard. While unloading the equipment in Hobbs’ yard, the truck touched an electrical line and Brunson’s employee was injured. The employee sued Hobbs, and Hobbs put its CGL carrier on notice of the claim. The CGL carrier began defending, but then declared bankruptcy, so Hobbs notified its business auto liability carrier (Union Standard) of the claim, who defended under a reservation of rights.
The Union Standard policy covered certain non-owned vehicles "used in connection with" the insured’s business. The issue was whether the Brunson truck was covered. The court used the policy language to determine context; and found that the non-owned autos provision covered ""autos" owned by [Hobbs] employees or partners or members of their households but only while used in [Hobbs] business or [Hobbs] personal affairs." By using this context analysis, the Tenth Circuit found that instead of covering all autos somehow related to Hobbs’ business, the policy was only intended to apply to Hobbs’ affiliated persons using privately owned vehicles on company business.
Finding coverage was also in conflict with New Mexico’s "reasonable insured" standard, as well as the common purpose of such provisions.
The court was concerned with the expansive interpretation of the clause by the district court, which it believed would expand coverage to any vehicle which had a business connection to the insured. Rather, the coverage was only as to those vehicles over whom the insured might be considered to have respondeat superior liability.
